Fiona Orr's tips on managing your credit card

Tips for credit card debt management

There are good and bad habits you can get into with your credit card. These simple tips may help to manage your credit cards better.

Know the credit card basics:

• Most credit cards have an annual fee, so limit the number of fees you pay by only having one or two cards.
• If possible, try and pay more than the minimum monthly payment amount. This will help you pay off your balance quicker and could help you save on interest.
• A higher credit limit can sound exciting but do you really need it? You don't have to accept it when offered; in fact, you can lower your credit limit to a more manageable level.
• Check if your card has an interest-free period. With these cards, interest on purchases is charged if the closing balance is not paid off in full by the due date each month. For cards with no interest-free period, interest is charged from the date a transaction is made.
• Cash advances may incur interest from the date you obtain the advance until the date the advance is paid off in full. You may also incur a separate cash fee, which is usually a percentage of the cash advance amount. If you are using cash advances each month, you may need to re-assess your monthly budget to find out where you may be going astray.

Choose a credit card that is right for you:

• Ask questions about what's being offered, and always read the fine print. Features such as bonus points may vary from card to card. Do your homework to be satisfied you're getting a product that suits your needs. If you think you can pay off your closing balance each month, a rewards card or one with an interest-free period might suit you. Otherwise a low interest rate card might be better.
• If you are looking to shift to a lower interest rate card, or consolidate debt from multiple cards, you could take advantage of a low-rate Balance Transfer offer or transfer to a credit card that rewards you for reducing your balance. You can get very attractive credit card interest rates on Balance Transfers. Check how long the offers last, and ensure that you pay off the debt before the promotional period ends and the credit card reverts to the standard interest rate.

Think about debit cards:

• A debit card sees you using your own money rather than borrowed money. Debit cards operate just like a standard ATM card, in that you use them to purchase goods via EFTPOS or at ATM facilities to withdraw cash, all directly from your account. As well, some debit cards can also be used to make purchases over the phone or internet.
• Debit cards can be handy for everyday purchases, whereas credit cards can still be a great backup for unforeseen expenses, or for earning points on reward programs - if you pay off your full closing balance each month. Note that debit cards can attract a monthly fee.

Plan your monthly repayments and budget your credit card with your cash flow:

• We are all individuals when it comes to how much we can afford to spend. The best way to determine what you can afford is to prepare a budget. It might sound tedious, but a budget is an excellent tool for setting limits on your day-to-day spending and keeping on track. A budget also helps you set longer-term financial goals, such as paying off debts and saving money. You can use the budget planner on bemoneyconfident.com to determine a budget you can live with.

For more hints on managing debt and maximising your budget, visit bemoneyconfident.com. There is also a great budget planning tool available on ANZ's myanzcreditcard.com.au. This new site is there to assist card holders with tips, tools and information about how cards work and how to manage them responsibly. And you don't even need to be an ANZ customer to use this site.

This article was written to provide you with tips and hints on how to manage your credit card/s more effectively.

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